British banks running out of time to seek EU licenses

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Britain-based banks looking to maintain their access to the euro zone after Brexit are running out of time to apply for licenses and should not count on a deal about a transition period, European Central Bank board member Sabine Lautenschlaeger said on Wednesday.

With Britain due to leave the EU in March 2019, banks are set to lose their automatic access to the single market unless a transition period is agreed, which is currently uncertain.

“Any bank that wishes to relocate from the UK to the euro area should really have submitted its license application already,” she said. “But if it hasn’t, it should do so by the end of the second quarter of 2018 at the latest.”

Sabine Lautenschlaeger, executive board member of the European Central Bank (ECB) /VCG Photo

The message was later reaffirmed by ECB policymakers at a meeting with the European Union’s chief negotiator with Britain, Michel Barnier.

“The participants discussed the importance of preparedness by market participants, as well as European and national authorities,” the ECB said in a statement.

Lautenschlaeger said eight banks have already taken formal steps to seek a new license and four others are planning to significantly extend their activities in the euro area.

But she added that the ECB may be open to granting banks extra time to implement their relocation plans as long as lenders present high-quality and credible plans.

“We won’t tolerate any empty shells,” she said, repeating the ECB’s long standing guidance.

“We therefore expect incoming banks to be able to produce complete and accurate data on booking models, hedging strategies and intragroup exposures,” she said.

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Source(s): Reuters